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The affiliate marketing industry has become a mainstay of online marketing efforts. Every day, companies pay hundreds of thousands of affiliates to drive potential customers to their websites and products. However, as with any industry where there’s money to be made, there are fraudsters who seek to take advantage of unsuspecting marketers and companies to steal their ad revenue.
Affiliate marketing fraud steals the money out of companies’ marketing budgets and puts them in the pockets of a fraudster—usually without generating any real business. There are many different types of affiliate fraud that companies have to deal with. However, the real question is: “How can you stop affiliate fraud so your company doesn’t lose thousands of dollars to scam artists?”
The best strategy for stopping fraud and enforcing affiliate marketing compliance best practices begins with having a working knowledge of the types of fraud you’re likely to face. Some common examples of affiliate fraud (and methods for dealing with them) include:
Cookie stuffing is when a fraudster intentionally drops affiliate tracking cookie code into a website visitor’s cookie text file. These cookies cause the fraudster to get credit for the visitor’s actions later on (such as visiting an affiliate program’s website or making a purchase) even if they didn’t do anything to promote the site.
For example, a cookie stuffer might stack a dozen or more banner ads one on top of the other, all of them set to plant a cookie in every visitor’s web browser without their knowledge. This strategy is called ad stacking, and it is only one of the ways that fraudsters can illicitly apply extra cookies. While the “top” ad is actually seen by the visitor, the other dozen or so ads beneath it in the stack are never actually seen—even though they still put affiliate tracking cookies in the visitor’s browser (and generate impressions for the fraudster).
This type of affiliate fraud can be incredibly difficult to stop. Some affiliate programs may opt to use promotional codes that affiliates have to share for their visitors to manually enter into a shopping cart.
For example, having the affiliate share the code “NAME2021” and for every time that code is used during checkout, the affiliate gets a cut of the profits. However, this manual process may keep some people from signing up. On the other hand, people who use the code are likely to be highly qualified leads who are interested in your products or services.
Internet influencers with large followings on social media sites like Instagram, Twitter, and other channels can be incredibly valuable as affiliate partners. Unfortunately, not all influencers are equal (or even real).
Influencer fraud is when someone artificially inflates their numbers in an attempt to make themselves look like a more lucrative partner than they actually are. This is often accomplished with purchased subscriptions and followers or the use of bots to inflate their engagement numbers. Fraudulent influencers may charge extremely high premiums for promotional ads on their channel, but produce very little in the way of results since their “followers” aren’t real.
The best way to counter influencer fraud is to carefully vet any and all influencers before adding them to your affiliate program. Using influencer auditing tools to check their followers, verify engagement rates on their content, look at their published posts (and comments on those posts), and the like can help to identify the fakes.
The common theme for affiliate marketing fraud prevention is that early detection is crucial for stopping fraud before it can cause significant harm. Being able to identify fraudsters and put a freeze on payments to them (or denying them access to your affiliate program entirely) is the key to minimizing losses from affiliate fraud.
Having the right affiliate fraud solution is a good start for fraud prevention. But, what makes for a great fraud detection partner for your affiliate program?
Some of the most important things to look for in any fraud solution are:
Finding fraudsters is the whole reason for adding a fraud solution to your company’s workflows. So, having a solution that can thoroughly analyze hundreds of different data points and compare that to a robust database with decades of fraud examples is important.
Using an affiliate fraud solution that can sniff out even the most sophisticated schemes can help ensure thorough detection so your company doesn’t have to pay fraudsters for bad leads and impressions.
While finding every fraudulent affiliate in your network can be important, it’s also necessary to verify that you aren’t acting on false positives and punishing good affiliates. Being too eager to eliminate fraud and not paying good affiliates (or not partnering with them) can cause some long-term problems with your affiliate program.
For example, not partnering with certain affiliates or influencers can mean missing out on great opportunities. Dumping a good affiliate because of a false positive can lead to negative press among other affiliates and can scare them away from the program.
So, it’s important to find an affiliate fraud solution that’s nuanced enough to accurately sort the good affiliates from the bad to eliminate false positives.
Some fraud solutions will just give you a web browser plugin or a downloadable software and leave you to your own devices. However, this doesn’t really help you get the most out of your new fraud solution. To really get the biggest return on investment (ROI), it’s important to have a fraud detection partner who will be there to provide support.
For example, if you have questions about how the fraud solution works or about how to set it up, can you get a support agent on the phone to answer these questions? Or, are you simply relegated to a help article on a knowledge base? Does the detection provider have FAQs and other resources to help you get started? Will they help you integrate the fraud solution with your workflows and software to provide the most seamless experience?
Best-in-class fraud detection should include quality support and service.
Finding out about affiliate fraud sooner is preferable to discovering it later. The faster you can uncover fraudsters, the easier it is to minimize the damage they can do to your marketing campaigns, company brand, and advertising budget.
So, speedy detection of fraudsters is critical. Real-time detection and notifications of fraudulent affiliates can help eliminate fraud before it has a chance to cause major harm. Also, having an automated system for detecting fraud helps free up your time to focus on more value-added tasks, like improving marketing messaging, reaching out to high-value affiliates to deepen relationships, and crafting custom messages for new customers and leads.
One of the biggest questions that companies have about their fraud solution providers is whether they’re really helping to stop affiliate fraud. It’s often difficult to put a hard value on the ROI for fraud detection services and solutions—so, many companies opt to go with a cheap option that does some shallow fraud detection but may fail to catch more sophisticated fraud schemes.
This is a problem because modern-day affiliate fraud has evolved greatly from the schemes of the past. Fraudsters aren’t restricted to simple click generation tools that can be thwarted with CAPTCHA anymore—they have access to bots that can clear these simple anti-fraud solutions and human fraud farm operations that can be incredibly difficult for less capable fraud solutions to detect.
Considering that, based on past Anura customer data, the average affiliate program has a 40% fraud rate (meaning that $40 out of every $100 spent is going to fraudsters), the value of catching these fraudsters early on can be massive. For example, if you were running a $50,000/month campaign and eliminated affiliate fraud, that’s a potential savings of $20k a month, or $240k per year.
But, that’s only when using the right affiliate fraud solution. A less capable platform might not catch the majority of fraud, letting you think you’re getting adequate protection when fraudsters are still running rampant in your affiliate program.
Using the above budget as an example, let’s compare two solutions. Solution A is a highly-capable, but costly solution that can catch the vast majority of fraud regardless of the complexity of the schemes used. Solution B is a cheap solution with no support and barebones capability that can catch some of the older scams and tools used by less sophisticated fraudsters.
With Solution A, your affiliate marketing team is able to detect over $200k worth of fraud in a year, but the solution costs $50k, netting your company an ROI of around $150k in money saved on fraud. Meanwhile, Solution B spotted about $20k worth of simple fraud schemes, and cost around $5k, netting an ROI of around $15k.
In this hypothetical situation, the cost for Solution A would definitely be justified. The ongoing losses from using an inferior fraud detection solution would leave the company bleeding money while seeing a significantly lower ROI from their marketing spend.
So, it’s important to ask yourself this one question: Is your fraud solution really stopping affiliate fraud? Take a look at the numbers and how many affiliates the solution has caught in the past. Some key things to evaluate include:
There are a lot of solution providers that promise to eliminate affiliate fraud. However, few can back these assertions up with hard data on fraudsters caught and money saved.
Anura is different. Our ad fraud solution has a proven track record of success in helping companies eliminate hundreds of thousands of dollars in ad fraud and affiliate fraud spending. Regardless of your industry or target audience, our fraud solution is the perfect way to validate both affiliates and the traffic they bring in real time.
The Anura ad fraud solution leverages decades of expertise in detecting ad fraud combined with automation that generates signals in real time so you’re always aware of fraud. Additionally, our solution never marks an affiliate as a fraudster until we’re 100% sure so you don’t have to worry about false positives ruining your affiliate program.
Are you ready to root out fraud in your affiliate program so you can avoid wasting money on phony influencers and con artists posing as affiliates? Reach out to the Anura team today to get started. You can also learn more about how to protect your business against affiliate marketing fraud by downloading The Rise of Affiliate Marketing Fraud whitepaper at the link below:
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